The European Central Bank’s Governing Council raised its three key interest rates by 25 basis points on 11 June 2026, citing inflation pressures from the war in the Middle East and saying the move is robust across a range of scenarios for how the shock could affect the euro area medium-term outlook; after a 25 bp cut in June 2025 took the deposit facility rate to 2.00% and rates were then held unchanged through April 2026, the deposit facility, main refinancing operations and marginal lending facility rates will increase to 2.25%, 2.40% and 2.65% respectively from 17 June, while APP and PEPP portfolios continue to decline as maturing principal is no longer reinvested. In the new Eurosystem staff baseline, headline inflation is seen averaging 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028, with inflation excluding energy and food at 2.5% in 2026 and 2027 and 2.2% in 2028, while growth is projected at 0.8% in 2026, 1.2% in 2027 and 1.5% in 2028, with inflation forecasts for 2026-27 revised up and growth forecasts for 2026-27 revised down from March because of a higher energy price path and a more pronounced hit from the war to commodity markets, real incomes and confidence. The ECB said the outlook remains uncertain, with upside risks to inflation and downside risks to growth, and reiterated that it will follow a data-dependent, meeting-by-meeting approach, base decisions on the inflation outlook, incoming economic and financial data, underlying inflation and transmission, and is
European Central Bank2026-06-11
European Central Bank raises key interest rates by 25 basis points
The European Central Bank raised its three key interest rates by 25 basis points on 11 June 2026, citing inflation pressures from the war in the Middle East, with the deposit facility, main refinancing operations and marginal lending facility rates rising to 2.25%, 2.40% and 2.65% respectively from 17 June. Eurosystem staff now project inflation at 3.0% in 2026, 2.3% in 2027 and 2.0% in 2028 and growth at 0.8%, 1.2% and 1.5%, with 2026-27 inflation revised up and growth revised down, while the ECB reiterated a data-dependent, meeting-by-meeting approach and said Asset Purchase Programme and Pandemic Emergency Purchase Programme portfolios will continue to decline.